M/s. Godavari Corporation Pvt Ltd., Industry House, 159, Churchgate Reclamation, Mumbai-400 020. Vs. Income Tax Officer-1(1)(4), Aayakar Bhavan, Mumbai-20.
September, 15th 2015
IN THE INCOME TAX APPELLATE TRIBUNAL "G" BENCH, MUMBAI
BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER
AND SHRI AMIT SHUKLA, JUDICIAL MEMBER
I.T.A. No. 4547/M/2010 (AY: 2003-2004)
I.T.A. No. 4548/M/2010 (AY: 2003-2004)
M/s. Godavari Corporation Pvt / Income Tax Officer -1(1)(4),
Ltd., Industry House, Aayakar Bhavan, Mumbai -20.
159, Churchgate Reclamation,
./ PAN : AAACG1850D
( /Appellant) .. ( / Respondent)
/ Appellant by : Shri R.S.Chokshi and Smt. M.K.
/ Respondent by : Shri S.T. Bidari, Sr. AR
/ Date of Hearing : 14.07.2015
/Date of Pronouncement : 11 .09.2015
/ O R D E R
PER D. KARUNAKARA RAO, AM:
There are two appeals under consideration involving common issue
relating to the disallowance of foreign travel expenses. CIT (A) confirmed
the additions in both the years therefore, the assessee is in appeal before
2. Briefly stated relevant facts of the case for the AY 2003-04 are that
the assessee incurred a sum of Rs.2,62,422/- on foreign travel of Shri D.K.
Agarwal to Singapore. In this regard, it is the submission of the assessee
that Shri D.K. Agarwal, a Senior Executive of the company, represented the
assessee in shareholders meet conducted by M/s. P.T. South Specific
Viscose, Indonesia. This is a shareholders meet and the assessee sent Shri
Agarwal for the said meet of the joint venture. The expenses incurred by
the assesee in respect Shri Agarwal's aforesaid foreign travel were
disallowed by the AO rejecting the assessee's contention questioning the
business purposes. While, these are the facts for the AY 2003-04, the facts
for the AY 2005-06 are also more or less the same except the travel was
undertaken by some foreigners and that expenditure disallowed in that
year is Rs. 3,28,433/-. Matter travelled to the first appellate authority for
3. During the first appellate authority, after considering the submissions
of the assessee, CIT (A) held that the expenditure incurred in connection
with the investment in shares of the joint venture cannot be deemed as an
allowable expenditure u/s 37 of the Act. Again aggrieved with the said
decision of the CIT (A), assessee is in further appeal before the Tribunal
for both the assessment years under consideration.
4. During the proceedings before us, Ld Counsel for the assessee
submitted that the travel was undertaken by the employees of the
company and not by the management or by their spouses. In such
circumstances, he assessee has rightly booked the said expenses as the
business purposes of the assessee. On the CIT (A)'s objections, Ld
Counsel for the assessee submitted that the management could not
undertake the travel and in their place, employees were deputed. On the
issue of undertaken travel to Singapore, when the meet actually held in
Jakarta, there is no satisfactory explanation.
5. After hearing both the parties and on perusal of the orders of the
Revenue Authorities, we find there is no dispute on the genuineness of the
expenditure in both the years. The dispute is only with regard to the
employees travelling to shareholders meet where the employees are not
the shareholders. The business purposes of the assesse are not sufficiently
and adequately demonstrated before us. Therefore, we are of the opinion,
both the appeals should be remanded for one more round to the file of the
AO for adjudicating the issue afresh. Assessee shall demonstrate where
exactly the meet took place, why Shri Agarwal travelled to Singapore, how
Shri Agarwal is connected to the shareholders meet when the assessee is a
shareholder in the joint venture company. Further, assessee shall also
demonstrate as to what is fact on the disallowance made by the AO in the
earlier year on account of foreign travel. Accordingly, grounds raised by
the assessee in both the appeals are allowed for statistical purposes.
6. In the result, both the appeals of the assessee are allowed for
Order pronounced in the open court on 11th September, 2015.
(AMIT SHUKLA) (D. KARUNAKARA RAO)
JUDICIAL MEMBER ACCOUNTANT MEMBER
.../ OKK , Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)-
4. / CIT
5. , , / DR,
6. / Guard file.
/ BY ORDER,
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai